Systematic Investment Plan India: SIP plan offered by Canara Robeco is the
best systematic investment plan to invest a fixed amount in a mutual fund at
regular intervals. Know more on how to achieve your financial goals in an
easy way.

MF-Basics

Human Life cycle

Human life is long and complex and passes
through many stages. Each stage has its own
challenges and opportunities.

One needs to plan for their aspirations like
marriage, child's education: post retirement
years, etc. from an early stage itself.

How one manages ones income in the productive
years has a similar effect on one's unproductive
years as well.

An important question that arises then is –
"Will saving alone meet all present and future
expenses?"

The Answer – No! Introducing 'Inflation' – The
Invisible Killer

Have you ever wondered why the same thing costs
more than what it used to cost a few years back?
Also, your savings which could buy you a
particular set of items previously would now buy
you less of the same items.

Simple Steps to Wealth Creation

Start Early – be
the first to take the first step

Consider the following scenarios where different
investors start investments at different age
levels and invest Rs 2000 per month till the age
of 60 years. The person who started investing at
the age of 25 years stands benefitted more as he
has started early and can benefit from power of
compounding. Even a higher investment amount may
not compensate for the growth potential of
starting early.

Invest in the
Right asset class – Risk return balance to
optimize growth

Inflation for the past 18 years has been on an
average at 6.43% on CAGR basis; an investor
should always look at an asset class which has
the potential to generate positive inflation
adjusted returns. Historically on analysis for
the past 25 years, equity as an asset class has
the potential to beat inflation and generate
positive post tax and inflation adjusted
returns. (Refer to the chart below)

Rising expenses and falling value of money are
the Income punctures which every one faces.
Also, Lifestyle Inflation is leading to many
luxuries becoming necessities over the last few
years, a trend which will continue even in
future. A mobile which was not necessary 10
years back has become one now.

So, how do beat inflation and meet my future
goals? It would require simple rearrangement of
priorities.

Savings can contribute towards realizing one's
aspirations and achieving a comfortable
lifestyle even post retirement. However how do
we beat inflation and create wealth?

Investing with a
plan – Consistent and continuous investment

Systematic Investment Plans (SIPs) in mutual
funds has long been considered one of the better
ways for the common man to invest in Mutual
Funds

What is a Systematic Investment Plans?
SIP is s strategy whereby you commit to invest a
fixed amount at specified intervals into the
fund of your choice. Since the amount is
invested regularly and is constant, you get more
number of units in the falling market and fewer
units when the price is high. It helps you to
smoothen out the market fluctuations and the
investment will be a low cost over a period.
This strategy in investing is called 'Rupee Cost
Averaging'

Benefits of Systematic Investment Plan

Systematic Investment Plan allows you to buy
more number of units as the market moves
down and less units as markets moves up.

Reduces
risk by spreading investments over a longer
period of time at various levels of the
market.

Reduces
cost of Investment in Fluctuating Markets.

Consistent and continuous implementation of
these strategies.

Rupee Cost Averaging
Rupee Cost Averaging is an effective investment
strategy that eliminates the need to time the
markets. All you have to do is invest a fixed,
pre-decided amount of money on a regular basis
over a long period of time. Since the amount
invested per month is constant, you buy more
units when the price is low and fewer units when
the price is high. The table given below clearly
illustrates the concept.

As mentioned above, the average price for the
investment is Rs. 9.97 and 1003 units would have
been purchased. However in the event of the lump
sum purchase the price of investment would have
been 10 with only 1000 units purchased. The
concept of Rupee Cost Averaging is to invest
across market cycles thus bringing the cost
price down, which contributes to the returns of
the investors.

SMART INVESTOR PLAN – Practical Report
The chart below shows the performance of Rs.
2000 SIP in BSES Sensex for different time
period. The chart clearly shows how the
following the SMART INVESTMENT PLAN helps reap
benefits over a longer period of time.

Time is the KEY in the markets: The longer you invest, greater the benefits